World oil demand growth will suffer in the second half of the year, declining by 150,000 b/d, to 850,000 b/d due to the debt crisis in Europe and possible weak economic growth in China, the Energy Information Administration's chief, Adam Sieminski, said Tuesday.
The comments came after EIA released its July Short-Term Energy Outlook, where it lowered its forecast for global oil demand in 2012 to 88.64 million b/d, down 240,000 b/d from its forecast a month earlier.
The revisions by EIA put year-over-year oil demand growth in 2012 at 730,000 b/d. The 2011-2012 total world consumption growth rate was pegged at 0.9%, down from a previous 1.1% forecast. The 2012-2013 growth rate was lowered by 0.1 percentage point to 1.2%, according to EIA.
"Global oil consumption is now expected to increase by 700,000 barrels a day next year, about 400,000 barrels a day less growth than previously forecast," Sieminski said in a statement accompanying the report. "Most of the growth in oil demand next year will occur in China, the Middle East, and Brazil."
For 2013, global oil demand was revised 670,000 b/d lower to 89.37 million b/d.
World liquid fuels consumption grew by an estimated 800,000 b/d in 2011.
In the third quarter, world demand will reach its seasonal peak, reflecting both the US driving season and increased oil use for electricity generation in the Middle East, EIA noted.
"Given overall lower demand expectations, the impact of seasonality on the tightness of global oil markets is expected to be substantially less than in 2010 or 2011, when third-quarter consumption outpaced supply by 1.5 million bbl/d and 1.8 million bbl/d, respectively," EIA noted.
NON-OPEC SUPPLY RISES
EIA expects crude oil and liquid fuels production by non-OPEC to rise by 800,000 b/d in 2012, and by a further 1.3 million b/d in 2013.
In the July report, EIA revised up its estimate for non-OPEC supply for 2012 by 60,000 b/d, to 52.66 million b/d. Also revised higher was 2013 supply, which EIA forecast at 53.93 million b/d, up 270,000 b/d from a month earlier.
The largest area of non-OPEC growth is North America, where production increases by 880,000 b/d and 540,000 b/d in 2012 and 2013, respectively, resulting from continued production growth from US onshore shale and other tight oil formations and from Canadian oil sands.
EIA expects Kazakhstan, which will commence commercial production in the Kashagan field next year, will increase its total production by 170,000 b/d in 2013.
In Brazil, output is projected to rise by 120,000 b/d in 2013, with increased output from its offshore, sub-salt oil fields. Forecast production also rises in China, Russia, and Colombia over the next two years, while production declines in Mexico and the North Sea, EIA noted.
Unplanned outages to non-OPEC production totaled around 1 million b/d in June, higher than the estimate given in the June report, EIA said. The increase was due to an offshore workers' strike in Norway that affected 230,000 to 250,000 b/d of crude oil and NGL production, according to Statoil.
Late Monday, Norway's government ordered mandatory arbitration and an end to the strike, forestalling a threatened lockout that could have affected all of Norway's offshore production.
Unplanned disruptions also rose slightly in the second half of June due to a labor protest in Argentina that lowered production from the Cerro Dragon oil field, which has a capacity of 100,000 b/d. The field's operator is gradually ramping up production at the field as protestors have mostly withdrawn from the area.